New York Fed's Perli says reserve management buying is likely to be tapered after April tax date
Says:
- Treasury market has been functioning well despite recent auctions, and Treasury market liquidity has declined in line with rise of uncertainty.
- Not surprising to see auctions tail during times of uncertainty.
Context
The comments from New York Fed's Perli suggest a potential tapering of reserve management buying after the April tax date, indicating a shift in Fed policy that could impact market liquidity. This tapering may heighten uncertainty in the Treasury market, which has already been facing liquidity challenges, especially during auctions. Traders should closely monitor how this affects the USD and fixed income markets as the anticipated changes unfold.
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